SEM (ISEM) - Managing the Energy Market in Ireland
Are you wondering what is the SEM and how it is different to ISEM? Ever wonder how the energy market works in Ireland? Perhaps you are interested in joining the energy market in Ireland? Read on and get all the answers about these organisations which govern the energy market in Ireland.
What is SEM?
The initials SEM stand for Single Electronic Market. The SEM was established on November 1st 2007 by unifying Eirgrid (the Republic of Ireland’s transmission operator) with the System Operator Northern Ireland (SONI). It was put in place to ease the wholesale electricity market for Northern Ireland and the Republic of Ireland, following EU principles and guidelines of free trade across borders.
What is ISEM?
ISEM is the successor to SEM; known as the Integrated Single Electronic Market, which took over from SEM on the 1st of October 2018. The ISEM is the product of applying the SEU Target Model for electricity to SEM.
ISEM is the result of independent agreements between Ireland and the UK and in theory, should be unaffected by the UK’s withdrawal from the EU. However this is further complicated by Ireland’s membership of the EU, and as such, being subjected to EU regulations concerning energy generation and supply. The ISEM is beneficial for both the Republic and Northern Ireland and nobody wants to see it dissolved.
Who is Eirgrid?Eirgrid is the electricity transmission system operator in the Republic of Ireland. They took over the role from ESB networks in July 2006. ESB continues to manage the distribution system. Both Eirgrid and SONI are owned by the Eirgrid plc group.
What is the SEM Committee?
Confusingly, although the ISEM now manages the market, the decision-making committee for it is called the SEM Committee. The Committee is composed of two independent members:
- Members from the Republic of Ireland’s CRU (Commission for Regulation of Utilities).
- Members from Northern Ireland’s Utility Regulator.
The island of Ireland currently generates its electricity from coal, hydropower, natural gas, peat and wind power. The ISEM has over 2.5 million customers and all electricity generated or imported into Ireland must be bought and sold through it.
In recent years, the impact of Brexit on the ISEM continues to be a concern across the island of Ireland. The SEM Committee, sometimes referred to as SEMC, is to hammer out the details to go live with the new energy market.
To further complicate the situation, the actual day-to-day operations of the ISEM are run by SEMO (Single Energy Market Operator), owned by Eirgrid plc.
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What is SEMO?
SEMO means Single Energy Market Operator and they run the daily activities surrounding the electricity market on the entire island. It trades with the rest of the EU, allowing the free flow of electricity across the borders.
Anyone interested in buying or selling energy in Ireland first needs to register with SEMO. You will need to provide the following documentation as well as present a unit registration at the same time:
- Pay the Accession fee of €1,284.12 (VAT included).
- Present your SEMO application form via email at [email protected].
- Complete the Accession Deed.
- Provide certification of your company registry.
- Nominate and present the form for the user responsible to use the Market Participant interface.
- Present the user access form.
The entire application process is a lengthy process which can take more than 60 working days to complete.
How Does ISEM Work?
Previously, with SEM, Electricity generators submitted bids to SEM to generate electricity for 30-minute slots on the following day, and bids were queued up in order of least expensive to most expensive, with electricity demand being met firstly by the cheaper bids at the start of the queue.
ISEM however, provides the opportunity for generators to submit bids at several points during the day and provides much more flexibility with regards to the way generators and suppliers can take part in the energy market trading.
ISEM provides much more electricity generation from renewable sources than SEM initially did. A key reason for rebranding SEM as ISEM is to try and take advantage of the increased interconnection between energy markets across Europe. The Celtic interconnector project will be another great addition in reaching this goal.
The changes brought about by the new ISEM system benefit customers in three ways:
- They assure the security of supply by facilitating cross-border trading and best use principles. By trading energy with the rest of Europe, Ireland benefits from the economy of scale found in the EU's larger system.
- It is intended to be much more competitive than SEM, thereby increasing the possibilities of customers benefiting from electricity transmission and supply cost reductions.
- It aims to minimise the price pressures the island of Ireland faces due to its geographical location, and to maximise the use of renewable electricity generation. As renewable energy has a zero-fuel cost and thus is less expensive to generate, this should hopefully result in further future electricity price reductions.
ISEM is also planning significant upgrades to the electricity infrastructure networks on the island of Ireland, based on increasing sustainable energy sources.
Are There Similar Systems in Europe?
The EU is committed to allowing energy to flow freely in Europe without any barriers, in order to encourage competition and the best energy prices for consumers. Although much investment has been made into the EU energy market over the previous years, it is still felt to be underperforming and new objectives and plans are being put into place to work on increasing capacity and connectivity.
The end goal for the EU is a “supergrid”, where excess renewable energy generated in one state could be diverted to others, or in case of power failures, other states could help fill the gap when demand outstrips supply. Something more and more prevalent these days with the war in Ukraine and its effect on the cost of electricity across Europe.
Many systems similar to ISEM, where countries share energy grids, are currently being planned across Europe. Projects are underway for connecting the three Baltic states (Estonia, Latvia, and Lithuania) to Europe. They have already had their electricity grids successfully connected up to Sweden, Poland and Finland, and are now among the best-interconnected states in Europe.
Feasibility studies and research for the ISLES project completed in 2015, would have linked Ireland, Northern Ireland, and Scotland, to various renewable resources such as wind and wave energy. Unfortunately, after the vote on Brexit, the project was abandoned.
The latest report from the European Internal Energy Market focuses on the delivery of clean energy to meet its climate change targets of 2030 and 2050. The report is the fifth energy package presented by the association and further updates are expected to continue in the future.
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